In the second quarter of 2023, Cyprus witnessed a remarkable increase in rental prices across all property types, as indicated by the recently published results of the Ask Wire Index. Notably, annual rental prices surged by 17.9% for apartments, 13.6% for houses, 6.8% for commercial properties, 1% for warehouses, 10.8% for offices, 16.5% for holiday apartments, and 13.9% for holiday homes. Concurrently, property sales prices also saw an uptick, with apartments experiencing a rise of 12.2%, houses 4.6%, offices 4.4%, commercial properties 1.2%, holiday apartments 8.8%, and holiday homes 3.7%.

On a quarterly basis, rental prices continued their upward trajectory, with apartments rising by 5.6%, houses by 6.2%, commercial properties by 3.3%, offices by 4.8%, and warehouses by 0.5%. Similarly, holiday apartments and holiday homes experienced rental price increases of 3.3% and 3.2%, respectively.

The trend of rising property values was observed nationwide. On an annual basis, property prices surged by 12.2% for apartments, 4.6% for houses, 4.4% for offices, 1.2% for commercial properties, 8.8% for holiday apartments, and 3.7% for holiday homes. However, warehouse prices recorded a decrease of 1.5%. On a quarterly basis, property values witnessed a rise of 2.7% for apartments, 2.0% for houses, 1.0% for commercial properties, and 2.0% for offices, while remaining stable for warehouses. As for holiday apartments and holiday homes, prices increased by 3.0% and 1.2%, respectively.

Pavlos Loizou, the CEO of Ask Wire, offered insights into the Ask Wire Index results. He highlighted that the steady upward trajectory in property and rental values, which commenced in Q2 2022, has not shown any signs of slowing down. The surge is largely attributed to the significant increase in apartment and house prices in key areas such as Limassol, Paphos, and Larnaca.

However, Loizou also cautioned that the combination of higher interest rates and elevated property prices/rents has created a stable yet high market threshold. This indicates that the overall affordability of properties may be a concern for potential buyers and tenants.

Looking ahead to Q3 2023, Ask Wire anticipates that the prices of commercial properties may come under pressure. The appeal of alternative investments offering attractive returns, tailored to risk, could potentially draw investors away from the commercial property market. Nevertheless, the residential property market is projected to maintain relative stability, despite expectations of lower demand and a reduction in transaction volumes.

Loizou also acknowledged that the demand for commercial properties is likely to remain somewhat restrained, given the prevailing economic conditions and alternative investment opportunities.